1. Executive summary
Spotify is the leading global online music streaming service. Founded in 2006, the streaming service has been lauded for revolutionalizing the music industry by cementing the digital music experience among the listeners. The service is present in 171 countries and offers its subscribers a selection of over 70 million songs from its libraries (Hollensen, 2019). It has managed to keep its competitors at bay through its extensive assortment of music, its personalized music selection algorithm, and AI, satisfying the users and its popularity and strong brand reputation. In the past year, the streaming service managed to take up 32% of the global music streaming market share, with Apple Music coming second at 16% (Trainer, 2021). Despite the streaming service’s achievements so far, the service has recorded a drop in its stock market value and market share due to the growth of other music streaming services, particularly YouTube Music, which garnered 60% growth in the last quota (Trainer, 2021). As such, Spotify needs a marketing strategy geared to retain its current subscribers and attain more subscribers to retain its position as the global leader in music streaming services.
On conducting a SWOT and marketing mix analysis of Spotify, several opportunities have been identified that Spotify can utilize to market its service with the end goal of retaining and attracting new subscribers. The identified initiatives include diversifying its service offerings to include more podcast content to attract new subscribers and offering video streaming services to premium subscribers to provide value for money for the premium service. To increase its global market share, the company can also expand to new markets, particularly those not saturated with music streaming sites. Lastly, celebrity and brand endorsements can be used to market the streaming service. An implementation of this marketing plan will increase Spotify subscriptions and retain its market share.
2. Marketing Audit
Spotify is the world’s largest online music streaming site in the world. Launched in 2006 by Daniel Ek and Martin Lorentzon, the company revolutionalized the music industry (Trainer, 2021). Spotify ushered in the age of digital music. Spotify is an online platform that allows its users to stream over 70 million songs in its online library. The streaming platform operates under two types of subscription; free and premium-based subscription. The free subscription is where one registers for an account with no subscription fee and accesses music at a lower quality. The experience is also full of ads, and one requires an internet connection to access the music. The premium experience allows the listeners to access high-quality sound and download songs for offline use at a subscription fee.
Spotify is the largest online streaming music platform, with a staggering global market share of 32%. The service is available in 171 countries and continues to extend its market share across other regions. The service collaborates with record labels to avail the artist music for a 20% market share. It has gathered a large assortment of music in its library, which attracts users to the platform. It has managed to maintain its lead by outcompeting its main competitors, including Apple Music which comes in a close second at 16% market share, Amazon Music and Tencent music jointly at 13%, and YouTube music at 8%. There, however, seems to be trouble in paradise as the Spotify stocks took a 2% dip in the year (Trainer, 2021), despite the company registering the highest number of new subscriptions in the first quarter of the year. The fast growth of the rival streaming platforms, particularly YouTube music, which registered 60% growth, threatens Spotify’s lead. As such, interventions should be made to ensure it retains its position at the top of the pack.
3. SWOT Analysis
A SWOT analysis details the strengths, weaknesses, opportunities, and threats facing a product or service. Spotify boasts impressive strengths and opportunities but still has some major weaknesses and threats that need to be addressed. Spotify boasts an array of strengths. The first strength is its popularity and strong brand reputation. Spotify is a widely known brand globally and is available in 171 countries (Gaille, 2021). This wide popularity earns it the trust and loyalty of its subscribers, thereby maintaining the lead in the market share. The brand also enjoys a strong brand reputation among its users, attracting more subscribers to the platform.
The platform also boasts a wide collection of music and content. Spotify collaborates with the largest record labels to avail over 70 million songs and 2 million podcasts on its libraries for its users (Rahimi & Park, 2020). The wide variety in content earns Spotify a marketing edge over its competitors. Similarly, Spotify uses algorithms and AI to personalize the listening experience to the client’s music taste based on their listening history. The algorithms and AI can perfectly match the user to new playlists and music suggestions, enhancing the user experience, thereby earning the streaming service an edge over other streaming platforms.
Spotify also hosts several weaknesses. The most glaring weakness is the low pay they give the artists. The artist’s music is the core of the business, yet Spotify pays them the least for their content (Rahimi & Park, 2020). This may lead to artists pulling their music from the platform. The platform is also heavily reliant on the internet. The users can only stream the content over an internet connection, which may be problematic in regions where access to the internet is limited.
Spotify has several opportunities that it can exploit for its benefit. The platform can capture the podcast and video streaming market in addition to its music streaming platform (Rahimi, & Park, 2020). Podcasts have gained popularity over the years as millions of users tune in to the Spotify podcasts. The podcast market is still very green, which provides Spotify the best opportunity to dominate the market. Its vast accessibility and strong brand reputation will attract podcast content creators to the platform who will bring their audience to the platform, thereby fostering the platform’s growth.
The video streaming market also remains to be a very profitable and untapped avenue for the service. Video streaming helps enhance the listening experience, and when coupled with the good sound quality and music assortment, it could earn Spotify an edge over its rivals. The platform could also foster celebrity endorsements to grow its subscribers.
Digital marketing and influencers are the new way to push one’s product to a larger audience. Having celebrities push their followers to use Spotify will greatly increase the subscribers to the service, especially in new markets where the majority of the people are not aware of the platform.
Lastly, Spotify is faced with several threats that need to be addressed. One major threat is the fast growth of rival music streaming services. For example, in the past year, YouTube music has grown by 60%, which resulted in a drop in Spotify’s growth. All major rival companies reported a significant growth in the past year other than Spotify, which threatens its position as the leading music streaming platform. The company has also never reported a profit and has constantly run on losses. While this strategy has allowed it to report tremendous growth, it is not sustainable in the long term.
4. Objectives and issues.
The marketing plan’s objective is to restore Spotify’s lost market share and maintain its lead as the top global music streaming platform. Spotify will once again gain dominance over its rivals after the successful implementation of the marketing plan. However, several obstacles may arise in the successful implementation of the plan. One major hindrance may be the penetration into new markets. The new markets may be unaware of the streaming service and will therefore require more marketing efforts. Another obstacle would be satisfying the needs of customers from new demographics. Spotify would need to include music from different regions of the world in their libraries and configure their AIs to match the users to their taste in music which might be problematic. Another hindrance would be the capital to expand their market share, considering the streaming platform has never reported a profit.
5. Marketing strategy.
The key to the success of any marketing strategy is longevity. This marketing plan is geared to ensure that Spotify maintains its lead in the music streaming industry and differentiates itself from the rest of the competitors. The marketing strategies could capitalize on the opportunities available for Spotify to grow its consumer reach.
The first strategy the streaming platform can employ is the diversification of its services. It could grow its product offerings to include video streaming services and a podcast platform within the platform. Diversifying services will set the streaming service apart from its rivals and earn it a marketing niche over its competitors (Wilson & Gilligan, 2013). The strategy will also increase the number of premium subscribers on the platform since they will get more value for their money, thereby increasing Spotify’s revenue.
The second strategy would be revamping their marketing campaigns. The recent peak in the growth of the other music streaming services can largely be attributed to excellent marketing campaigns. YouTube Music, for instance, could attribute its growth to the advertisement campaigns on YouTube. It has also been offered as an alternative to Google Play on most android phones once Google Play was shut down, increasing awareness of the platform and subscription to the service. It is therefore clear that marketing is the key to the growth of subscribers. Spotify can also revamp its marketing initiatives by offering celebrity and brand endorsements. Celebrity endorsements would have celebrities market the service to their followers in a bid to encourage them to join the platform, which will lead to an increase in subscribers (Wilson & Gilligan, 2013). Similarly, working with phone brands and wearables to have discounts for its users will market the service and increase the platform’s subscribers.
6. Marketing mix and implementation
The marketing mix consists of four main components; product, price, place, and promotion. The product is Spotify’s music streaming platform. At face value, the streaming platform is not different from its competitors. It is possible to change this by adding features that will be exclusive to Spotify and will therefore create a marketing niche for the platform (Wilson & Gilligan, 2013). The platform could capitalize on the podcast industry by having a platform within the platform exclusively for podcasts. Podcasting is a fast-growing industry that is gaining the attention of millions of listeners. Capturing dominance over the industry this early will set up the platform as a market leader and attract multiple listeners.
Price is the value of the product or service. It is the cost the user has to incur to access the Spotify service. Presently, Spotify has two types of subscriptions, the free and premium-based subscription (Rahimi & Park, 2020). Spotify has had trouble converting the free subscribers to premium subscribers, mostly because they do not see the value for money. Spotify can change this by introducing video streaming services and exclusive releases on their premium subscription. By paying a fee, the subscribers can access music videos and get exclusive music video releases on the platform and exclusive podcast video interviews on the platform. These modifications will serve to create a marketing niche for the platform and attract more subscribers to the premium subscriptions, which will ultimately serve to grow the company’s popularity and revenue.
Place looks at the accessibility of the product by the consumer. Spotify currently boasts extensive global market coverage since it is available in 171 countries (Rahimi & Park, 2020). However, that is only a fraction of the global market. Spotify can grow its accessibility by expanding to other international markets. The rise of the internet age has allowed many corners of the world to access the internet and would therefore be able to use the streaming platform. The expansion will serve to grow Spotify’s market share and revenue.
Promotion is the marketing strategy used to create demand for the product or service. Marketing is crucial to the retention of subscribers and attraction of new subscribers. Spotify can revamp its marketing strategies by including celebrity endorsements, especially in the new markets. The celebrities will influence their followers to subscribe to the platform and increase the subscriptions to the service (Wilson & Gilligan, 2013). The company can also conduct endorsement deals with phone brands to offer deals to the phone users, further serving to retain and grow Spotify’s market share.
7. Implementation of the plan
Spotify can break into the podcast and video streaming sites by creating a platform within the platform that hosts the services. The company would then offer podcast content creators royalties in exchange for publishing their work on their platform. The company had plans to provide a platform to create a digital marketplace for podcasts which is commendable. However, more needs to be done to increase its hold in the podcast industry. The royalties and marketplace will serve to attract content creators and will therefore increase Spotify’s market share.
Similarly, the company would get digital licenses to publish music videos on its platform. It would also contact influential music artists to have exclusive premiering of their music videos on the platform. This initiative would ensure that the streaming services diversifies its product offerings and offers exclusive content. This exclusivity will act as a marketing niche and will attract and retain subscribers to the platform.
The platform can conduct an extensive market study to locate the new markets that are easy to penetrate. These markets should have adopted the digital wave and have access to the internet. Third-world countries are an untapped market full of potential. The company can focus on penetrating these markets by selecting a few countries with good internet connections and uptake of pop culture. Its recent expansion into India, Africa, Russia, and Asia has boosted the number of Spotify subscribers (BBC, 2021). However, they are yet to fully exploit the global market, with many countries still left out of Spotify’s established market. As such, the platform should continue to expand to new markets to boost its subscriptions.
Spotify can conduct an extensive study on the music preferences of the market it would want to penetrate. It can then contact the artists and offer them a deal to publish their albums on the platform to ensure the music preferences of the new market are catered for (Wilson & Gilligan, 2013). Spotify has already started on this initiative by including Afrobeat, K-Pop, and Amapiano in its music offering to cater to the new market tastes (BBC, 2021). However, there are many other genres out there that are waiting to be discovered, and including these genres will attract a large assortment of subscribers while at the same time setting the platform apart from its rivals, giving it a marketing edge.
Spotify can also approach the most influential celebrities in the new markets to push the service to their followers. Their endorsement of the product will convert their followers to the platform, increasing Spotify subscribers (Wilson & Gilligan, 2013). Similarly, it can use celebrities from their established markets to endorse the streaming service by offering exclusive releases on the platform. This will serve to retain the subscriber following in these established markets.
Spotify can conduct market research to determine the popularly used phone brands in their new and existing markets. They can then collaborate with the brands to promote the service by offering exclusive discounts for phone users for premium plans. This strategy will retain the current users, convert some users to the premium plan and attract new subscribers to the platform.
8. Marketing budget
Spotify would require an extensive budget to complete all those plans. The recent expansion to the African, Asian and Latin American markets cost the company hundreds of millions of dollars in paying royalties, marketing, and availing the platform in those locations. This marketing strategy will require a similarly large amount of money to execute. However, on execution, the expected increase in revenue will be unmatched.
9. Control
The marketing plan is set to take a year to complete. As such, it is important to evaluate the effectiveness of the implementation of the strategies. The company can conduct a quarterly analysis of the increase in subscriptions after rolling out the strategies. The company can also compare the rate of conversion of subscribers from free to premium based. This initiative will serve to ensure that the company monitors the impact of the strategies and executes any changes that may be necessary to ensure the success of the marketing strategies (Hollensen, 2019).
The company can also do an analysis of the changes in revenue after rolling out the marketing strategies. The marketing strategies are meant to increase the company revenue by increasing the number of premium subscribers. A comparison of the revenues can allow the streaming service to determine the effectiveness of the plan and conduct adjustments where necessary.
